IMF Advises CBN On Cyber Security, Operational Risks Of eNaira

IMF Advises Nigeria To Increase Tax

The International Monetary Fund (IMF) has stated that it necessary to manage cyber security and operational risks associated with the eNaira, Nigeria’s new central bank digital currency (CBDC).

The IMF noted that the eNaira is expected to raise the level of financial inclusion and ease remittances, but future risks will need to be addressed.

An economist at the IMF’s African department, Jack Ree, stated this in an article titled ‘Five Observations on Nigeria’s Central Bank Digital Currency’, and released on Tuesday.

“Like digital currencies elsewhere, the eNaira carries risks for monetary policy implementation, cyber security, operational resilience, and financial integrity and stability,” the statement reads.

“For example, eNaira wallets may be perceived, or even effectively function, as a deposit at the central bank, which may reduce demand for deposits in commercial banks.

“Relying as it does on digital technology, there is a need to manage cybersecurity and operational risks associated with the eNaira.”

The IMF, however, noted that Nigerian authorities have taken “measures to manage the risks”.

READ ALSO: AfCFTA To Become World’s Largest Free Trade Area – Adesina

The IMF however noted that, the transfer of funds from bank deposits to eNaira wallets is subject to daily transactions and balance limits to reduce risks of reducing the roles of banks and other financial institutions.

“Financial integrity risks, such as those arising from the potential use of the eNaira for monetary laundering, are mitigated by using a tiered identity verification system and applying more stringent controls to relatively less verified users,” the statement adds.

“For example, for now only people with a bank verification number can open a wallet, but over time coverage will be expanded to people with registered SIM cards and to those with mobile phones but no ID numbers.

“The latter categories of holders would be subject to tighter transactions and balance limits. Even so, wallet holders who meet the highest identity verification standards cannot hold more than 5 million naira (about $12,200) each in their eNaira wallets.

“To address cybersecurity risk, regular IT security assessments are expected to be conducted.”

According to the Bretton Woods institution, the launch of the eNaira has attracted a “substantial interest from the outside world—including from central banks” due to the “size and complexity of Nigeria’s economy.”

LEAVE A REPLY

Please enter your comment!
Please enter your name here